As I write this, it’s mere hours away from the clock striking January 1, 2023. This year as an intra-day trader, I had a front row seat to any number of challenges in 2022. ES hit its all-time high on the first day of the year and never managed to return. Crypto had a… oh let’s call it a “difficult” year, and even experienced traders struggled with the volatile market conditions.
This year was especially tough on those who depend on their “retirement portfolio”. Many people saw their investments crumble and their purchasing power destroyed, and it’s been an all-around crappy time for the “long” financial world overall. Even day traders like myself, though not constrained by a long-only bias, had a tough time with the schizophrenic volatility we saw, particularly in the last few months.
Despite all of this, I made a lot of progress as a trader this year. I continued to hone my skills and reads of the markets, and I’ve clearly identified a number of personal challenges that hold me back.
One of my biggest challenges is impatience. I don’t wait for my setups to show themselves, and I’m often tempted to jump on every potential opportunity that comes my way. This leads me to make impulsive trades that don’t fit with my trading process. Just because I’m now able to recognize opportunities, doesn’t mean they’re the right opportunity for me right now.
I also tend to be much too comfortable with risk. I’m happy to “try out an idea” and put on a trade, even if it’s not really all that great an idea or isn’t within my process, putting my capital at risk.
I also struggle, as I know so many of us do, with biases that can distort my decision-making. Possibly my worst, is a big problem with confirmation bias. This makes me completely blind to information that might be telling me that I’m definitely wrong on an idea and need to get flat.
To overcome these challenges, I’ve got to stick to my trading process. When I do, I make better decisions and avoid impulsive trades, and see a positive P&L trend. I’ve also got to stop taking the impulse, or “monkey” trades. If I don’t, then I can’t protect my capital and ultimately that’s death to a trader. I’m working on recognizing my biases in the moment, so I can make more objective decisions and not let my emotions cloud my judgement.
As I look ahead to 2023, I’m determined to continue improving as a trader. One of my big goals this year its to finally take an evaluation account to the point of withdrawal. I’m entering into my 3rd year now of serious, proper focus on futures trading, and I know my ability to read the market is solid enough. But my General Manager needs to manage my Trader, and my Trader needs to listen.
I’m also excited to start experimenting with automation. I know I’m not going to be able to just sit back and let a robot do all the work, but I think there are certain tasks that automation can handle really well. I’m looking forward to seeing how it can help improve my patience and discipline.
So, what were your experiences and lessons of 2022? What challenges did you face and did you overcome them? And what about your plans for 2023? Got any specific goals or renewed focuses for the new year? I’d love to hear your thoughts in the comments below.
Until next year, good trading!
Jonathan van Clute
Community Manager, Trading Research Group